The Titan brand has three attributes - leadership, innovation and pride in the consumer’s mind. Research

tells us that even to an up-market SEC A customer, Titan means style and elegance. Where we fell short

was in these "softer" attributes. Primarily because innovation was less frequent and less visible from Titan

in the last few years. However, we are back on the track with innovation, which is the essence of Titan,

apart from leadership and pride.

-Bhaskar Bhat, Managing Director, Titan Industries.1

Titan: Building a Brand Introduction In 2004, Titan, the world’s sixth largest manufacturer brand of watches after Casio, Citizen, Seiko, Swatch and Timex enjoyed a 58% market-share in the Indian watch market. The company’s watches were sold across India in over 1800 towns through some 7000 outlets. Of these, 150 were exclusive World of Titan stores and another 136 were multi-brand TimeZone outlets. The company’s watches were also sold in about 40 countries across the world through its marketing subsidiaries. Titan International Marketing Ltd. (TIML) based in London looked after the European operations; Titan International (Middle East) took care of Titan’s business in the Middle East and Africa and Titan Watches and Jewelry (Asia Pacific) Ltd. based in Singapore, managed the South Asian and South East Asian markets. In a survey conducted by The Economic Times in 2000, Titan was voted the 'Most Admired Brand' by consumers all over India across all product categories. Background Note The Indian watch industry The history of watches in India dated back to 1957. During a visit to Japan, Prime Minister, Jawaharlal Nehru (Nehru), received a watch as a gift. This sparked off his dream of seeing watches being manufactured in India. The dream became a reality in 1961, when the government owned Hindustan Machine Tools Ltd. (HMT), entered into a tie up with Citizen of Japan, to set up the first watch factory. Citizen also trained select Indian people from HMT at its watch manufacturing facility in Japan. The first watch model manufactured by HMT- the Janata model- was gifted to the senior most employee of the company by Nehru. In the next ten years, HMT’s production increased to 15,000 – 20,000 mechanical watches every month.

The early 1980s saw a technological revolution, with the invention of the integrated chip in the US. Digitals were in demand and LED (Light Emitting Diode)2 watches

1 Pande, Shamni. “Interview with Bhaskar Bhat,” www.agencyfaqs.com, 20th January 2003. 2 LEDs are tiny light bulbs that fit easily into an electrical circuit. But unlike ordinary incandescent bulbs,

they don't have a filament that will burn out, and they don't get especially hot. They do dozens of

2

gained in popularity. Japanese companies took over the manufacture of LCD (Liquid Crystal Display)3 for digital watches. There was a discernible shift in focus from mechanical to quartz watches in the international market. The Swiss watch industry declined because of its attachment to the mechanical watches. HMT made the same mistake in India.

Titan’s Entry

Titan came into existence in July 1984, as a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO). When Titan entered the market, the industry consisted of the organized segment dominated by HMT, the unorganized segment consisting of small, local players and the grey market. HMT, which was entirely focused on functional needs, manufactured only mechanical watches. The small time players lacked the nation wide sales and support network which HMT had. The grey market was flooded with quartz and digital watches from Japan. Their sturdy performance and looks made the Japanese watches very attractive. Since watch imports were restricted, HMT did not foresee any immediate danger. But the demand for watches in the grey market indicated that there was a market for well-designed watches and reliable performance. Titan decided to manufacture only quartz (analog and digital) watches, but in a wide variety of designs and prices. Titan located its two million-unit capacity watch manufacturing facility in Hosur, the industrial town in Tamil Nadu around 30 km from Bangalore. Titan did not have the technical know-how for manufacturing quartz watches. So it entered into an agreement with France Ebauche, a European manufacturer of quartz watches to provide the technology and supply kits for assembly. Titan launched its quartz range of 20 models in March 1987. Dissatisfied with its suppliers, Titan decided to integrate backwards. In 1990, it established a case manufacturing facility near Hosur with technical support from Citizen. In 1992, Titan began manufacturing Electronic Circuit Boards. Titan also tied up with Hirsch of Austria, to set up a leather strap-manufacturing unit at Hosur. The unit began commercial production in late 1993. Titan entered into a contract to buy the unit's entire production for a minimum period of three years.

different jobs and are found in all kinds of devices. Among other things, they form the numbers on digital

clocks, transmit information from remote controls, light up watches and tell when the appliances are turned on.

3 LCD (liquid crystal display) is used widely in laptop computers, digital clocks and watches, microwave

ovens, CD players and many other electronic devices. LCDs are common because they offer some real

advantages over other display technologies. They are thinner and lighter and draw much less power than

cathode ray tubes (CRTs). Liquid crystals have been used to create a new kind of shutter and grids of

these tiny shutters open and close to make patterns that represent numbers, words or images.

3

In 1990, Titan entered into a tie-up with Timex, USA4. With a 29% stake in the venture, Timex provided technological inputs and manufactured the watches. Titan was responsible for marketing and distribution. The joint venture, Timex Watches Limited (TWL) targeted first-time users and also attempted to convert mechanical watch users to quartz. Titan transferred its Aqura range to TWL. To avoid competing with each other, Titan kept out of plastic watches while Timex refrained from offering metal watches. TWL launched its watches in October 1992, positioning its products as solid watches with style. The campaign was woven around adventure sports like rafting and rock climbing and sought to leverage the Timex and the Tata connections. Titan started manufacturing its 18-carat gold jewelry watches and jewelry in 1994. It set up a fully integrated Rs. 400 million-jewelry plant in Hosur. The plant had the capacity to manufacture four tonnes of gold a year. Titan launched these products under the brand name, Tanishq in late 1994. To change its image from a watch manufacturer to a fashion accessories manufacturer, Titan was renamed Titan Industries Ltd. in 1995. Titan scaled the capacity of its Hosur plant to 4.18 million units in 1996 to meet the domestic and international demand. By 1998, serious differences emerged between Titan and Timex. Timex wanted a majority stake in the venture. This was not acceptable to Titan. Moreover, both the partners had broken their non-compete clause. Titan had launched its Exacta and Spectra range of watches in the lower segment and Timex had launched the Indiglo range in the upper end. Finally, the partners decided to dissolve the joint venture in 1998. Recent Developments In the 1990s, liberalization brought with it a host of luxury watch brands into India like Piguet, Cartier, Christian Dior, Omega, Raymond Weil, Rolex, and Tissot. The Exim policy announced on 31st March 1999 removed all quantitative restrictions on the import of fully assembled watches, three years ahead of the commitment made to the World Trade Organization (WTO). With a penetration level of 20 pieces per 1000, the Indian market presented a great opportunity for watchmakers. Titan witnessed stiff competition from the Chinese at the lower end of the market from the Japanese (Seiko, Casio and Citizen) in the mid segment along with Timex and Allwyn, and from the Swiss watches in the luxury segment. Titan's strategy over the years had been to promote multiple ownership of watches. However, people who already had one or two Titan watches were getting bored and were attracted towards other international labels. In September 2003, Titan launched

4 Timex, USA, had earlier entered into a tie-up with Jayna Times. The tie-up, however, was short-lived.

Timex then looked around for another Indian partner familiar with the domestic business environment.

Its search coincided with Titan's search for an alternative to Casio. In October 1990, the two companies

agreed to set up a joint venture.

4

its international watch collection symbolically titled "The New World Watch" at Mumbai, with 60 designs and prices in the Rs 3,000 – 8,000 bracket. The collection was available in steel, gold and steel with leather straps. With its international styling and design, the New World Watch was meant to be a perfect alternative to an international brand. Within three months of the launch, Titan sold more than two lakh watches through World of Titan showrooms alone, generating sales of approximately Rs 25 crore. In October 2003, Titan entered into a three-year contract with leading designer Rohit Bal, to introduce a range of luxury watches. The "Nebula Rohit Bal" collection was conceived in 18-Karat gold, adorned with diamonds and other precious stones. Titan decided to introduce two collections with eight to ten products every year. The exclusive range was jointly marketed by Titan and Rohit Bal Design stores across the country. Priced between Rs 50,000 and Rs 1 lakh, the collection was promoted as a product designed to form a part of the Indian wedding trousseau.5 In December 2003, Titan announced a five-year strategic licensing arrangement to market internationally renowned Tommy Hilfiger designer watches, in India. Titan felt that its product portfolio was incomplete without high-end designer brands. The Swatch group with brands like Rado, Longines, Tissot and Omega had an estimated 80 % share of the high-end market. Tommy Hilfiger met the gap. Priced between Rs 5,000 - 10,000, Titan planned to pit Tommy Hilfiger against brands like Calvin Klein and Espirit, among others. The company was also discussing with other global luxury watch brands in the country, to maintain and service their watches in its 600 service centers.

Marketing Strategy

Segmentation Titan had traditionally focused on the premium segment. In the late 1990s, Titan segmented the market into different groups based on lifestyle, socio-economic groups and personalities. Titan’s sub-brands included Fastrack, Dash and Nebula, Titan Steel, Raga, Regalia and Classique. At the lower end, Titan had Sonata, its chief weapon to take on the unorganized watch market in India. Through a combination of communication and distribution, the company sought to entice first time owners of watches to the Sonata brand in small towns and cities. Sonata became India’s second largest selling watch brand after Titan. Fastrack was targeted at the youth, while Dash was meant for children in the age group of six to fourteen years. Titan Steel aimed at the trendy urban youth in the 25 to 35 years age bracket. Titan’s Raga range of silver watches targeted working women. Most

5 “Titan, Rohit Bal join hands to design luxury watches,” www.economictimes.indiatimes.com, 16th October

2003.

5

of these differentiated offerings were at different price levels within the mid-segment. At the top end, Titan had its range of jewelry watches - Nebula, priced above Rs 6,000. Exhibit: I Titan’s Range/Sub-brands of Watches6

Brand Target segment

Price Range No. of Models

Launch Year

Spectra Gents Rs. 1140 to Rs. 1830 24 1992

Spectra Ladies Rs. 650 to Rs. 1410 22

Raga Ladies Rs. 1420 to Rs. 4000 29 1992

Classique Gents Rs. 1575 to Rs. 2495 19 1996

Classique Ladies Rs. 1495 2

Fastrack Gents Rs. 925 to Rs. 2800 32 1998

Fastrack Ladies Rs. 995 to Rs. 2250 16

6 This list is not exhaustive.

6

Sonata Gents Rs. 365 to Rs. 1225 6 1998

Sonata Ladies Rs. 365 to Rs. 1275 15

Nebula Gents Rs. 8950 to Rs.13500 8 1999

Nebula Ladies Rs. 5950 to Rs. 6950 4

Dash Boys Rs. 295 to Rs. 395 15 1999

Dash Girls Rs. 250 to Rs. 350 13

Edge Gents Rs 4,495 to Rs 4,995 16 2002

Source: Compiled from various sources by ICFAI Knowledge Center.

Fastrack

Launched in 1998 as `Cool Watches' from Titan, Fastrack targeted customers in the age group of 22-30. Titan decided to promote Fastrack as an independent brand. The company targeted the youth segment (youth by age and youth by attitude) which was bold, individualistic, non-conformist and fashionable for this brand. This highly demanding consumer segment looked for innovative products, international styling and multi-functional watches that were not complicated. Titan decided to promote them as lifestyle products. In 1999, Fastrack's focus shifted further down the age spectrum - to those in their late teens and in their early 20s. Titan launched the Digital Collection, positioned as ‘Too Sexy For Your Wrist’. Later, Titan introduced the Fastrack Fashion Collection, mainly aimed at women. In 2002, Titan launched a fresh campaign for Fastrack with the punch line, ‘Are You On It?’ The ad featured a Formula-1 racer who got out of the party in time to join Narain Karthikeyan, India's most celebrated figure on the racing tracks, for a training session in the evening. On Valentine’s Day in 2002, Titan introduced ‘The Big Heart Offer’. The promotion in Mumbai, Delhi, Pune and Bangalore began on the first of February and continued till the 14th. It offered fashionable jewelry consisting of a pair of earrings and a pendant on the purchase of any Fastrack watch. Fastrack Valentine’s collection, comprising four designs was also available as a limited offer. Three hundred watches of each design were on sale across India. These watches were designed in steel, with leather straps in black, red and silver colours. The dials were in matching colours with heart patterns, making the collection a blend of fashion and romance. In July 2003, Titan extended its Fastrack sub-brand to fashion accessories. The company launched Fastrack I-Gear, a collection of sunglasses. The extension aimed at filling the vacuum that existed between branded players like Ray Ban, Killer Loop and

7

Police and the unbranded players. While branded sunglasses were priced at Rs 1,650 and above, the unbranded segment offered sunglasses priced at Rs 700 and less. Fastrack I-Gear priced between Rs 695 and Rs 1,795 was initially launched in Bangalore and later on introduced in other markets. The product was offered in all the World of Titan showrooms and at specific retail chains like Lifestyle, Shoppers' Stop and Music World across the country.7

Sonata

Titan’s stakes were high at the lowest end of the watch market where around 15 million watches were sold. Of this, only about seven million were branded. In 1998, Titan launched the Sonata brand to exploit the huge potential in the budget segment. With a much lower price and the reassurance of the Titan name, Sonata fitted the consumer's wallet. While the Titan buyer valued style and brand image and was willing to pay a premium for its looks, the Sonata buyer was an active value seeker looking for functionality and utility at an affordable price. Internally, the company restructured its watch division to separate Sonata from Titan. Prices ranged from Rs.365 and Rs.1,275. Sonata, which was sold under the Tata label as ‘A Tata product’ was available only in exclusive Sonata outlets and not through any of the Titan showrooms. Titan did not open Sonata showrooms in metros like Mumbai or Delhi. Instead, the company focused on the semi-urban and rural markets. Titan already had a presence outside the urban belt. Its watches were available in towns with a population of around 20,000. Rural customers who came to these towns had access to Titan watches. The company planned to open showrooms at locations like bus terminals and railway stations where rural customers visited frequently. Dash In July 1999, Titan launched a new children's watch brand called ‘Dash’. This was a move to change the customer perception that Titan served only the older generation. Priced between Rs. 250 and Rs. 395, Dash targeted children in the age group of 6 -14 years. Research revealed that 50% of the 35 million urban children had the necessary purchasing power to buy watches. Dash was launched in eight cities in exclusive Titan showrooms. Besides, the company also made them available in select bookstores and toy shops where children visited frequently. The showroom corner where Dash was displayed was attractively designed in vivid colours. Display tables were specially designed to match the height of children.8 Being a children’s brand, Titan constantly experimented with new products, colours, schemes, designs, etc. In 2001, Titan launched three new collections of Dash watches

7 “Titan launches new sunglasses,” The Hindu Business Line, 1st August 2003. 8 Singh, Namrata. “Dash-Titan targets kids with trendy Rs. 250 to Rs. 395 watches,”

www.financialexpress.com, 8th July 1999.

8

featuring popular cartoon character Popeye, a digital collection, and Lumibrite- "glow in the dark" collection. The Popeye collection9 was priced in the range of Rs.350 and Rs.395. The digital range was priced between Rs.425 and Rs.495, while the Lumibrite collection of watches was priced at Rs. 325. Dash also targeted girls with five watches that came with additional changeable bezel rings10 that enabled one to change and match the watch to one's outfit. These watches were priced at Rs.295.11 In 2002, Dash introduced a unique contest for children aged between 6 and 14 years on cartoonnetworkindia.com. Children were invited to use their creativity and imagination to design a watch. The prize-winning design was launched as a new watch in the Summer 2002 collection. The winner received the first watch of this collection, while the Top 5 won a Dash watch each. All participants were awarded certificates. Outsourcing enabled Titan to price Dash watches competitively. In the first batch, Titan released 3,000 Dash watches priced between Rs 250 and Rs 395. If Titan was to manufacture the watches, just the cost of the machines required for making the mould would have been Rs 25 lakh. Keeping in view the small initial volumes, Titan would not have been able to adopt the kind of pricing it had decided for Dash.

Edge

Introduced in 2002, Titan Edge was positioned as the world’s slimmest watch, with a slimness measure of 3.5 millimetre (mm), a movement12 of 1.15 mm, beating the Swatch Skin range by 0.45 mm. Titan Edge was priced between Rs 4,495 and Rs 4,995 while the Swatch Skin was priced between Rs 3,150 and Rs 6,150. Titan’s earlier efforts to make a slim watch had resulted in a 4.2 mm Classique watch supported by a movement of 1.75 mm. It had been launched in 1996 and had been priced around Rs 2,000.

Distribution

Titan opened its first specialty shop ‘The World of Titan’, in December 1987 in Bangalore. Apart from Titan controlled outlets, Titan watches were sold in thousands of other stores, franchisee showrooms and multi-brand TimeZone outlets. In addition, the company had opened nearly 600 service centers to repair watches, replace batteries and change straps. In 2000, Titan launched the TimeZone programme to bring top watch stores in the country under its banner as a “chain of trusted watch shops”. Over 70 % of the watches sold in TimeZones were Titan watches. However, TimeZones accounted for only 10 % of the company's sales. The company showrooms pitched in

9 Titan Industries was the sole licensee for Popeye characters in the watch category in India. 10 Bezel is the metal ring that surrounds the watch dial or face. 11 “Add a comic dash to your wrist with Titan,” www.tata.com, 20th March 2001. 12 Technical term used by manufacturers for the part that actually runs the watch.

9

with another 31 %.13 The rest of the sales came from the company's dealer network. Watch stores with potential were converted into TimeZone outlets to provide a range of reliable watches, a wide choice of brands, quality retailing, good after-sales service and ambience. These stores aimed at pulling the brand-undecided customers into the company's showrooms. In early 2002, Titan opened ‘Titan Value Mart’, a production and export surplus discount format, in Bangalore.14 Here, the company made available watches and clocks for the European and the West Asian markets. Around 10% of export production was surplus and sold through the Value Marts. There were around 400 models on display with prices varying from Rs 700 to Rs 70,000. These products were not retailed through regular Titan outlets. The Value Marts were equipped with after-sales service centers. In March 2003, Titan began revamping - ‘The World of Titan’ stores into large flagship stores of over 2,000 sq ft each with a contemporary retail identity. Initiated in Delhi, Mumbai and Bangalore, the exercise aimed at changing the brand’s image from old and mature into young, vibrant and contemporary. The retail stores were repositioned as hot and happening places, where customers could browse leisurely, without interference from salespeople. Titan's new retail strategy focused on attracting the impulse buyer. The new layout encouraged casual browsing. Titan did away with the counter system and displayed the product on the walls. For the convenience of customers, all displays were at eye level. Titan used various vibrant colors and interesting graphics. The first such flagship World of Titan showroom in New Delhi, was revamped at a cost of Rs 1 crore. The company also began to outsource and retail a range of accessories such as cardholders, wallets, bags, scarves and cell phone holders. The flagship stores displayed Titan’s international collection of watches (The New World Watch), priced between Rs 3000 and Rs 8000. By mid-2004, Titan expected the new retail identity to be carried over to the other showrooms across the country.15 Titan also had plans to set up stand-alone World of Titan showrooms in mega malls. In a bid to ensure uniformity in customer service across the country, Titan rolled out a ‘franchisee management’ initiative in 2003. Titan applied reference checks to evaluate the integrity and involvement of franchisees. They were taken on factory visits to understand the corporate culture and the quality standards and given product training. Titan also conducted ‘ghost shopping’. A company representative posing as a customer would walk into franchisee outlets to assess customer service quality. Ghost shoppers conducted exit interviews with customers who had just shopped in the outlet. Well

13 Shastri, Padmaja. “Titan clocks into conversions,” www.financialexpress.com, 28th July 1999. 14 “Titan’s Value Mart in Chennai,” The Hindu Business Line, 29th January 2002. 15 “Titan dials a new retail makeover to spur growth,” www.financialexpress.com, 7th March 2003.

10

performing franchisees became members of Titan’s Platinum Club and Gold Club, while margins of those who did not match the standards were cut.16 In April 2004, Titan once again embarked on a gradual revamp process for its World of Titan showrooms across the country. The new look aimed at a shift from the traditional "we-they" approach between sales personnel and customers to "us" and "We will choose together". Titan renovated 60 World of Titan showrooms across India at an investment of around Rs 12 crore. The company planned to give a new look to all the stores in India’s top eight cities by 2005, at an additional investment of Rs 12 crore. Titan had 161 World of Titan outlets in 98 cities, which attracted around 12 lakh customers every year. Compared to the earlier watch display in horizontal counter format, the new look outlets had vertical units on the wall and horizontal counters, which were small individual units. The showrooms had open look and bright lighting to make browsing easier for the customers.

Advertising and Promotion

Ogilvy & Mather Advertising (O&M) had been handling the Titan watches account since the brand’s inception in 1987. Titan initially positioned its quartz watches as international watches from the Tata group. The advertisement described Titan quartz as,

'The international watch you can pay for in rupees'. It followed this up with 'You don't need to pay in dollars, pounds or dirhams to buy a Titan watch' and 'To find watches like these you don't have to go to Europe, Japan, America or a duty free shop'. The campaign also emphasized the gift proposition, with ads saying: 'The next time your husband wants to buy a saree, ask him for a Titan watch’.

The campaign was a huge success and gave Titan a lot of visibility. The Titan tune, taken from Mozart’s Fifth Symphony was first introduced in Titan ads in 1988. Soon the tune became an integral part of the brand’s identity. Titan refreshed and contemporarized the tune with each campaign. The New World Watch commercials took on Spanish and Italian influences. The tune was used in different ways. In the gifting commercials, the music began the moment the person realized that he/she had been gifted a Titan watch. The Titan tune became so popular that in January 2003, when Titan celebrated the milestone of 50 million watches, customers could walk into any Titan showroom and win a watch, just by humming the tune.

16 Narayan, Tarun. “Keeping a watch on franchisee equity at Titan Industries,” www.financialexpress.com,

10th May 2003.

11

In November 2002, Titan entrusted O&M with the overseas advertising for the brand. The new campaigns developed by O&M aimed at building and reinforcing the Titan image by addressing social issues and portraying well-known people like Mahatma Gandhi, Mother Teresa and Albert Einstein.17 Titan had faced the dilemma of choosing between advertising for the mother brand, Titan, and some of its popular sub-brands such as Fastrack. In 2003, Titan decided to focus its advertising mainly on Titan and Sonata. Even in the case of Fastrack, where Titan had been launching separate campaigns, the company decided to reinforce its links with Titan. Titan had a customer loyalty programme called ‘Titan Signet’, which was a select club that recognized and rewarded the loyalty of Titan customers in the World of Titan showrooms. Titan Signet also provided the company with a platform for direct feedback from these customers. The membership was valid for a period of three years from the date of enrollment. Any customer at The World of Titan could become a member of The Titan Signet if he / she bought;

• Any Titan watch priced at Rs 2000 or more. • Any Titan Raga Watch. • Any Titan clock priced at Rs 875 or more. • Titan watches or clocks worth Rs 3000 or more even if no single product fitted

any of the above categories. • Titan Gift Vouchers worth Rs 3000 or more.

A special Signet membership account was maintained for each member. Every time a Signet member made purchases at The World of Titan showrooms or at the Titan Watch Care Centres, points were automatically credited to the membership account. The member could redeem the points for Gift Vouchers at any time within three years. The list of rewards included products from Titan, Tanishq, Raymond, Shoppers Stop, Music World, Fabmall, VIP, Louis Philippe, Health & Glow and Hidesign. Various other services and benefits were also available to Signet members, like exclusive offers on Titan watches and clocks at The World of Titan, Titan Watch Care Centres as well as on other premium brands, first information about new products, invitation to new collection previews and priority service at the Titan Watch Care Centers. New Product Development

17 Chandran, Rina. “O&M to create Titan watch ads for European markets,” The Hindu Business Line, 16th

November 2002.

12

On July 22, 2004, Titan introduced its latest innovation, ‘FLIP’, India’s first dual face watch with dual functionality and styling. FLIP, once again underscored the excellent collaborative work undertaken between Titan’s Design Studio, the Production Department and the R&D team. Watches in the FLIP collection incorporated two watch movements embedded in a single case. The dual faced watch allowed customers to switch between international time zones and alternative lifestyles – be it formal or casual, with the mere ‘flip’ of the dial. The FLIP created dramatic appearance changes ranging from a stark minimal style to a very sporty one. Titan also announced the availability of watches with the Automatic Generating System (AGS) feature. Customers could use the watch without any concerns about depletion of the power source. The collection also featured a watch in the ultra-light material -Titanium, creating a bold new-age expression of style and technology. Bijou Kurien, COO stated, “FLIP once again reiterates Titan’s technology and R&D capabilities, making us one of the pioneering, global watch brands. With this launch, we bring in a distinctive combination of style and dual functionality, which will definitely appeal to the evolving tastes and preferences of our discerning global customer.”18 Priced between Rs. 5495 and Rs. 6500, the unique collection, was available in 2 cases and 6 variants. The AGS watches were available in 2 cases and 5 variants priced between Rs7995 and Rs8500. Celebrated actor Akshaye Khanna, who unveiled the collection explained, “I think FLIP is the perfect accessory to complement my ever-changing lifestyle; one watch that I could wear on a shoot, a formal evening or to a lounge bar. Its extremely stylish and fashionable.”19 Award winning designer and lead designer of the collection, Michael Foley, stated, “The biggest challenge during product development was in devising a series of innovative constructions and transforming each into unique and striking design expressions. Special manufacturing techniques like MIM (Metal Injection Moulding) had to be used to keep the design features true to the original concept.”20 The FLIP collection was supported through a multi-media ad campaign across niche electronic media and select print publications.

Concluding Notes

18 “Titan re-defines innovation in the watch industry,” www.tata.com, 22nd July 2004. 19 ibid. 20 “Titan re-defines innovation in the watch industry,” www.tata.com, 22nd July 2004.

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Titan planned to invest Rs 10 crore in 2004 to strengthen its brand and an additional Rs. 10 crores to brace up its distribution and service network. Titan showrooms accounted for around one-third of the company's sales, while the remaining came from multi-brand outlets. Bhat remarked, “We foresee 15-20 per cent year-on-year growth. Our watch business will contribute 55 per cent while the rest of the sales will come from the Tanishq brand of jewelry,"21 In a bid to develop new revenue streams for future growth, Titan also explored the possibility of building small-scale intelligent devices using the company’s precision engineering skills. In early 2003, Titan created a separate ‘Precision Engineering Division’, to leverage Titan’s expertise in design, precision machining, injection moulding, electronics, machine building and automation for manufacturing automotive and aerospace precision parts. Titan’s customers for this division included Hindustan Aeronautics and ISRO. The division hoped to generate sales of Rs.10 - Rs. 12 crores by the end of 2004. Titan was planning to open 20 to 22 outlets by March 2005. The company had plans to set up both World of Titan outlets and anchor stores (part of big departmental stores like Lifestyle) in malls according to the market dynamics. The company also planned to open Titan-Tanishq combination stores in malls since malls were the latest happening places in retail space. Titan was also evaluating a new retail format — Youth Stores — for the youth oriented Fast Track collection. Figure (i) Titan- Sales and Profits

21 “Titan aims 15-20% growth,” www.rediff.com, 11th February 2004.

14

Net Sales (Rs. Crores)

0

200

400

600

800

1000

Net Sales (Rs.

Crores)

442 482 630 697 725 798

Mar-

98

Mar-

99

Mar-

00

Mar-

01

Mar-

02

Mar-

03

PAT (Rs. Crores)

0

5

10

15

20

25

PAT (Rs.

Crores)

14.64 17.06 19.28 23.48 13.09 6.21

Mar-

98

Mar-

99

Mar-

00

Mar-

01

Mar-

02

Mar-

03

Source: www.tata.com

15

Exhibit: II Print campaigns by Titan

16

Source: www.agencyfaqs.com

Headline: "It isn't just psychiatrists who use watches to hypnotize people.

Baseline: Style at work.

AGENCY: O&M

17

Exhibit: III TVC for Sonata

A man gets his first salary. Jingle: "Pehla yeh pal."(This first moment)

His friend reminds him of celebrating the day, but he shakes it off.

He decides not to spend on the taxi and walks his way back home. Jingle carries on, "Pehli yeh hul-chal...

...pehla ehsaas, aaj sab kuch mere paas hai."(..first realization, today I have everything) He looks at the display of a garment shop and...

...nods 'no' to it and moves ahead. He also walks past the watch showroom but pauses for a moment. Jingle: "Jindagi ki yeh ghadi...

...bhoolega dil na kabhi." (The heart will not forget life’s this watch) He hands over his first pay to his mom. She opens the envelop and finds a watch...

18

...along with the rest of his pay. She straps it on his wrist with an assuring smile.

Super: 'Sirf 495/- se lekar.'(From Rs. 495 onwards) MVO: "Sonata, aapki garv ki ghadi, ek TATA utpadan." (Sonata, watch of your pride. A TATA product). Product window.

Source: www.agencyfaqs.com. Exhibit: IV Titan: Financial Results as on 31 March 2004

Year ended 31-3-2004 (Audited)

Year ended 31-3-2004 (Audited)

Consolidated Year ended 31-3-2004 (Audited)

Consolidated Year ended 31-3-2004 (Audited)

Net sales Income from operations

958.52 797.9 963.78 807.5

Other income 2.09 10.4 37.17 15

Total income 980.61 808.3 1,000.95 822.5

Expenditure

Decrease/(increase) in stock in trade

-34.67 -5.04 -34.74 -2.76

Consumption of raw materials 593.47 473.23 593.76 475.07

Excise Duty 63.64 61.96 63.64 61.96

Staff Cost 84.98 71.57 85.18 72.24

VRS Cost 9.6 5.18 9.6 5.18

Advertising 59.82 47.44 61.06 48.8

Other Expenditure 81.69 63.69 88.19 63.17

Total Expenditure 858.53 718.03 866.69 723.66

Interest 37.62 41.35 42.19 46.43

Depreciation 21.47 21.14 23.17 21.27

Amortisation 3.96 8 6.4 10.5

Profit/(Loss) before exceptional item

39.03 19.78 62.5 20.64

19

Exceptional items

Provision for diminution in value of investments

10 10 - -

Provision for doubtful Loans and Advances

15 - - -

Add share of profits less losses of associates (net of amortisation of goodwill on consolidation)

- - 0.2 -5.14

Profit/(Loss) before taxes 14.03 9.78 62.7 15.5

Income taxes - Current tax 8.96 4.87 10.23 5.35

- Deferred tax -6.44 -2.99 -6.44 -3

Profit/(Loss) after taxes for the year

11.51 7.9 58.91 13.15

Less income tax earlier years 0.33 1.69 0.33 1.69

Net profit 11.18 6.21 58.58 11.46

paid up equity share capital (face value Rs.10 per share)

42.28 42.28 42.28 42.28

paid up preferences share capital

40 40 40 40

Reserves excluding revaluation reserves

82.85 80.19 83.55 37.78

Basics and diluted earnings per equity share (rupees)

1.76 0.6 12.97 1.84

Aggregates of non-promoter share holiding

- Number of Shares 19,921,521 19,078,141 19,921,521 19,078,141

- Percentage of Shareholding 47.10% 45.10% 47.10% 45.10%

Source: www.titanworld.com

Exhibit: V Titan: Segment Details

Segment Results Year Ended 31-3-2004 (Audited)

Year Ended 31-3-2004 (Audited)

Consolidated Year Ended 31-3-2004 (Audited)

Consolidated Year Ended 31-3-2004 (Audited)

Net sales / Income from segments

Watches & Clocks 534.49 453.89 574.69 466.81

Jewellery 425.68 345.13 425.83 346.42

Total 960.17 799.02 1,000.52 813.23

20

Profit / (Loss) from segments before interest and taxes and after share of profits less losses of associates

Watches & Clocks 55.55 37.88 84.87 38.89

Jewellery 20.57 13.72 20.66 13.61

Total 76.12 51.6 105.53 52.5

Less : Interest attributable to segments

34.54 40.13 39.11 45.2

Operating profit / (loss) from segments

41.58 11.47 66.42 7.3

Less : Exceptional items

Provision for diminution in value of investments

10 10 - -

Provision for doubtful loans and advances

15 - - -

Profit / (loss) from segments before taxes

16.58 1.47 66.42 7.3

Unallocable income net of unallocable expenditure

-2.55 8.31 -3.72 8.2

Profit / (loss) before taxes

14.03 9.78 62.7 15.5

Capital Employed in segments

Watches & Clocks 449.89 491.74 448.94 447.29

Jewellery 112.11 124.33 112.11 124.87

Others (Corporate) 44.98 55.04 46.63 57.07

Total 606.98 671.11 607.68 629.23

www.titanworld.com

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21

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22

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